How Long Does a Chapter 7 Bankruptcy case take?
In general, filing for Chapter 7 bankruptcy will last from between three and six months, from the time it is filed.
Who is eligible to file for Chapter 7 Bankruptcy?
In order to file for Chapter 7 Bankruptcy, you must meet certain eligibility requirements. First of all, you must either be a small business, or an individual, or a married company. If you file as a small business (a partnership or sole proprietorship, for instance), you can discharge many of your business debts. Additionally, you can only file for Chapter 7 Bankruptcy once in any six year period; moreover, you cannot file if you have had a previous bankruptcy case dismissed within the last 180 days or if you have attempted to abuse or defraud the bankruptcy systems. Finally, a judge may also ask that you file for Chapter 13 if the judge deems that you have enough assets to repay most of your debts. Additionally, a recently passed federal law also adds a layer of eligibility requirements.
What might disqualify me from a Chapter 7 Bankruptcy case?
Besides having too many assets to qualify for Chapter 7 or an inability to meet the threshold eligibility requirements under the new bankruptcy laws, if you haven’t been honest with your creditors, you Chapter 7 Bankruptcy case may very well be challenged. For instance, if a bankruptcy judge learns that you have attempted to conceal assets, or if you have attempted to unload assets to friends or family to hide them from your creditors, your case may be dismissed. Furthermore, you should never run up your debts in anticipation of filing a bankruptcy case or conceal property or assets from a spouse.
What debts cannot be discharged in a Chapter 7 Bankruptcy case?
Under the bankruptcy laws, there are several types of debts that you cannot cancel or discharge. Foremost, bankruptcy will not discharge a “secured debt.” In other words, if you have loan to pay for your house or car, it will not be cancelled if you want to hang on to that house or car. Furthermore, if you do not list the debt when you file for bankruptcy, it cannot be discharged; likewise, if you fail to provide adequate contact information, the debt will not be released if the creditor cannot be reached.
You cannot discharge student loans except in extremely rare cases where a student loan debt will cause “undue hardship.” (Undue hardship includes persistent poverty and a good faith effort to try to pay off the debt.) Neither can you discharge tax debts (including income tax or property tax), except in extreme cases. Also, you cannot discharge alimony or child support, court ordered fine or fees, debts resulting from intoxicated driving, nor debts that couldn’t be discharged in a previous bankruptcy.
What debts will you be able to discharge?
For the most part, all of your unsecured debts will be discharged in a Chapter 7 Bankruptcy; in other words, all of your credit card debts and any other debts you might owe to creditors such as utility payments, cable or telephone, or merchant credit. However, there are some cases in which even those debts will not be discharged, such as debts that arise from fraudulent activity (you secured loan with no intention of paying it back, for instance), debts that arise from lying about your financial condition, recent debts for luxury items (debts over $1,150 to one creditor within 60 days of filing for bankruptcy), or recent cash advances more than $1,150. However, even the above described debts will be written off unless the creditor objects; and considering how expensive it is for a creditor to challenge a debt, it’s often not worth it for the creditor.
What is a Chapter 7 Trustee?
Once you file for Chapter 7 Bankruptcy, you will be assigned a trustee, who is required to examine your bankruptcy papers for fraud or abuse, and to recover as many assets as possible from you to pay back your creditors (in fact, a trustee is paid more for recovering more assets). If you have no assets, your Trustee probably won’t have a lot to do with your case, unless you are hiding something, in which case the Trustee may investigate further. If you have nonexempt assets, your Trustee is charged with recovering those from you, selling them, and using the proceeds to pay back your unsecured debts before the remainder is written off.
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What is a Chapter 7 Meeting of Creditors?
About a month after you file for bankruptcy, after your Chapter 7 Trustee has taken a look at your papers, you will be schedule to meet with your creditors, a mandatory meeting. In most cases, this meeting will be very brief (five to ten minutes), because creditors will rarely show up. Chances are, especially if you have no assets, the only questions that will be asked are if your papers were accurate, and if you anticipate any additional income, such as from income tax returns. Your trustee may also ask you questions about recent purchases, to investigate whether you are abusing the system; the trustee may also ask how you arrived at the valuations of your existing property. Additionally, if your creditors do show up, they may ask you several questions, seeking explanation or clarification. After the meeting of the creditors, the next and only communication you will receive is your discharge notice.
How long will a Chapter 7 bankruptcy stay on my credit report?
If you declare Chapter 7 bankruptcy, it will show up on your credit report for ten years (starting from the date it’s discharged). This is several years longer than a Chapter 13 bankruptcy stays on your credit report, as Chapter 13 bankruptcy only stays on your report for seven years.
In both cases, it should be noted that the bankruptcy will still be a matter of public record even after being removed from your credit report, because of the court records associated with the matter.
What are your obligations under Chapter 13?
Under a Chapter 13 reorganization plan, you will have to make monthly payments to your Chapter 13 Trustee, who will use the proceeds to pay your creditors and collect his or her own commissions. Certain types of debt will have priority over others. For instance, administrative costs (the costs to file for bankruptcy), alimony, child support, and state and federal income tax will be paid back fully, as will mortgage defaults and missed car payments, if you want to keep your house and car. Unsecured debts (generally, those debts that would be completely discharged under Chapter 7) will be paid back according to your income and existing assets. In many cases, under Chapter 13, many of these creditors may see very little of their debt paid, depending on how much of your disposable income you have to put toward your debts. The amount of unsecured debts that will be paid often also depend on the attitude of your bankruptcy court; many courts will not approve a plan that doesn’t allow for paying back these creditors at least 50 percent of their owed debts.
Who is eligible for Chapter 13 Bankruptcy?
First of all, businesses are not eligible for Chapter 13 - you must be either an individual or a married couple filing jointly. If you want to file bankruptcy for your business (including an LLC, Corporation, or partnership), you must seek Chapter 11 reorganization. Additionally, individuals or married couples must have a stable and regular income to file for Chapter 13, which includes wages, salary, regular self-employment income, commissions, pension payments, public benefits, child support payments, royalties, and so on. Further, you must have disposable income - in other words, you must have enough income left over after you have paid for necessities to fund a repayment plan. Additionally, all of your disposable income must be devoted to your repayment plan for 36 months (or more). To be eligible for Chapter 13, you must also pay back 100 percent of certain types of debt (such as car or mortgage payments), and any budget that you propose to pay back your debts must be reasonable. Finally, Chapter 13 eligibility requires that your debts not be too high.
After I file for Chapter 13 Bankruptcy, will I still owe any debts?
Quite possibly; even if you fulfill your three to five year payment plan, when your bankruptcy under the new bankruptcy laws is completed, you may still owe debts to some creditors. For instance, nondischargeable debts (student loans, alimony, taxes, etc) cannot be discharged at all (which explains, of course, why they’re called nondischargeable). However, once you have completed your bankruptcy under the new bankruptcy laws, your remaining unsecured debts will be wiped out, under the new bankruptcy laws’’s “superdischarge.” Under the new bankruptcy laws, however, several types of debts are not eligible for this superdischarge, including debts incurred through fraud or misrepresentation, debts incurred through embezzlement or breach of fiduciary duty, taxes, debts arising from death or personal injury caused by the debtor’s malicious conduct, and debts to a creditor never notified in time for that creditor to file a proof of claim.
What is superdischarge?
In a Chapter 13bankruptcy, superdischarge is the discharge a debtor receives at the end of a Chapter 13 case; it discharges all debts under the bankruptcy plan except certain long-term debts, such as mortgages, alimony and child support, certain education loans, restitution based on criminal convictions, and debts for death or personal injury caused by drunken driving.
If I file for Chapter 13, will my creditors stop harassing me?
Yes! Once you file for any type of bankruptcy, your creditors must immediately discontinue calling or otherwise harassing you. From that point on, all contact must be made through the court system. When you file for bankruptcy, an “automatic stay” goes into effect, which prohibits creditors from taking any direct action against you (unless the bankruptcy court gives specific permission). At this point, creditors cannot try to collect debts through phone calls or letters, file lawsuits against you for the debts, record liens against your property, or seize your property or garnish your wages. However, even the automatic stay does not prevent you from having to pay alimony or debts to the IRS. Furthermore, filing for bankruptcy, generally, will only prevent your landlord, utility company, or your mortgagor from pursuing an action against you for only a few days or weeks; after that, utility companies can shut off your utilities if you do not provide assurances or a deposit; a landlord can continue an eviction; and a mortgagor can continue with a foreclosure proceeding.
What is a Chapter 13 Trustee?
When you fie a Chapter 13 case, you are assigned a Chapter 13 Trustee, whose job it is to collect your payments in distribute the money to your creditors (and keep 3 to 10 percent commission for him or herself). Unlike a Chapter 7 Trustee, a Chapter 13 Trustee often plays an active role in your bankruptcy case, and may - in some cases - even provide financial advice, help you with your budget, help you to set up and modify your repayment plan, help you get back on track if you miss payments, and help you to valuate your assets. Nevertheless, a Chapter 13 Trustee will generally allow you to keep control of your financial situation so long as you continue to make your payments as scheduled.
What is a Chapter 13 Meeting of Creditors?
About a month after you file for a Chapter 13 case, you will be scheduled a Meeting of Creditors. In a Chapter 13 case, your trustee will go over your case, including all of the forms, and go over your proposed repayment plan. After your trustee has gone over those details, creditors will have a chance to question you, and ask you to modify your repayment plan or budget in order to better accommodate repayment. You may also ultimately negotiate with your creditors and modify your repayment plan to accommodate their changes.
How long will a Chapter 13 bankruptcy stay on my credit report?
If you declare Chapter 13 bankruptcy, it will show up on your credit report for seven years (starting from the date it’s discharged). This is several years shorter than the length of time a Chapter 7 bankruptcy stays on your credit report, as Chapter 7 bankruptcy stays on your report for ten years.
In both cases, it should be noted that the bankruptcy will still be a matter of public record even after being removed from your credit report, because of the court records associated with the matter.
What are the advantages of filing for Chapter 11 instead of Chapter 7 bankruptcy?
For a business, the primary advantage is the ability to continue its operations. For the creditor, it also provides an advantage over Chapter 7, in that unsecured debts will be at least partially paid back, instead of completely discharged, as is done under Chapter 7. Furthermore, under Chapter 11, a business can restructure its secured debts in such a way that payments will actually be lower, spread out over a longer period of time; it allows for termination of unprofitable leases or contracts; it provides for an extended period of time to pay back taxes; and unsecured creditors will not have to be paid back in full, in most cases. Finally, there are no debts that are considered nondischargeable in a Chapter 11 Bankruptcy.
What are options other than Chapter 7 or Chapter 11 for businesses?
In many cases, Chapter 11 bankruptcy merely delays the inevitable; reorganization is not always the best solution. In fact, before filing for Chapter 11, business owners should strongly consider simply selling off the business and its assets, because - at this point - the owner may be able to get a better price for the business and its assets, the owner can control which creditors actually get paid, an owner can likely end the financial distress sooner than can a bankruptcy court, and certain intellectual property can be transferred. However, selling off a business and its assets will not necessarily stop creditors from trying to collect (because there is no automatic stay provision) and the owner will not be able to continue receiving moneys from the business to pay off debts.
Referred from: (http://www.quizlaw.com/)
What is a Chapter 13 Trustee?
Who is eligible for Chapter 13 Bankruptcy?
How long will a Chapter 7 bankruptcy stay on my credit
If I file for Chapter 7, will my creditors stop harassing me?
Yes! Once you file a bankruptcy case, your creditors must immediately discontinue calling or otherwise harassing you. From that point on, all contact must be made thurthermore, filing for bankruptcy, generally, will only prevent your landlord, utility company, or your mortgagor from pursuing an action against you for only a few days or weeks; after that, utility companies can shut off your utilities if you do not provide assurances or a deposit; a landlord can continue an eviction; and a mortgagor can continue with a foreclosure proceeding.
What debts cannot be discharged in a Chapter 7 Bankruptcy case?